This study seeks to determine factors that contribute to individual’s honesty in the marketplace and willingness to exploit market power. In order to identify these factors a survey was administered to undergraduate students enrolled in institutions across the United States. We find that perception of others has a multifaceted relationship with honesty and exploiting market power. Respondents that believe others are likely to be honest are more likely to be honest themselves. But the relationship is symmetrical, believing others are dishonest leads to dishonest behavior. An increase in the perception of firm’s taking advantage of market power leads to respondents being more likely to do so themselves. In terms of expressing market power, individuals that believe raising the price of a good in response to a demand shock is fair will do so. Business education is found to lead to more honest behavior but does not influence an individual’s propensity to exploit market power. Individuals that believe others are altruistic are more likely to forego self-interested behavior. Lastly, religiosity is found to increase honesty but not the use of market power. These findings suggest that educators ought to pay attention to the ways in which students form their perceptions of how individuals behave in the marketplace.
Peach, Nathanael D.; Buckley, Robert; and Reynolds, Caleb, "Does Business Education Promote Unscrupulous Behavior?" (2019). Faculty Publications - College of Business. 134.